Providers who received CARES Act Provider Relief Fund (PRF) payments exceeding $10,000 in aggregate are required to report the use of funds as addressed in the terms and conditions. While we believe there is a chance the reporting deadline will be pushed back, the reporting portal is currently scheduled to open on January 15, 2021 with a February 15, 2021 deadline.
On November 2, 2020, the U.S Department of Health and Human Services (HHS) released its Final Reporting Data Elements. The report defines the key elements required to support the use of funds.
Important Dates to remember:
- January 15, 2021: reporting portal opens for providers
- February 15, 2021: first reporting deadline for all providers on use of PRF funds through December 31, 2020
- July 31, 2021: final reporting deadline for providers who did not fully expend PRF funds prior to December 31, 2020
Participants that received more than $10,000 are required to report. Additionally, there are more detailed reporting requirements for providers who received more than $500,000. Providers who received more than $750,000 in aggregated federal financial assistance are subject to Single Audit requirements.
Participants will use their normal method of accounting to report their use of the PRF (Provider Relief Fund) payments.
Funds received are considered income for income tax purposes.
Use of funds should be applied in the following manner and order:
- Use of expenses that have not been reimbursed or obligated to be reimbursed by other sources, including general and administration expenses
- Insurance paid-property, malpractice, business or other relevant to operations
- Personnel-workforce related to the prevention, preparation or response of COVID-19 including staff, temporary and contractors
- Fringe benefits-hazard pay, travel reimbursement and employee health insurance
- Lease payments-new equipment or software leases
- Other G&A expenses-expenses not captured above that is part of overhead structure
- Healthcare related operating expenses not reimbursed or obligated to be reimbursed by other sources (net of insurance/patient payments)
- Supplies-expenses paid for purchase of supplies to prevent, prepare, or respond to COVID-19
- Equipment Expenses paid for purchase of equipment to prevent, prepare, or respond to COVID-19
- Information technology-expenses paid for IT systems for care delivery
- Facilities-expenses paid for facility-related costs to prevent, prepare, or respond to COVID-19
- Other healthcare related expenses-expenses not captured above to prevent, prepare for, or respond to COVID-19
- Funds that were not fully expended on expenses noted above can then be applied to patient care lost revenues up to the amount of the difference between their 2019 and 2020 actual patient care revenues/net charges.
While HHS has not yet released detail on the specific documentation requirements to support the elements listed above, we encourage clients to analyze their expenses and revenue based on the above noted facts. HHS has a frequently asked question page which includes a cumulative list of specific questions and answers relative to the data elements noted above including clarification on payroll related expense, limits on highly compensated employee salary and the inclusion of tax expense incurred because of the PRF income.
If you have questions regarding PRF reporting or other COVID – 19 tax and accounting matters, please contact one of our specialists.